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Varvara hub

Large modern processing centre with long-life open-pittable resources and the capacity to process third-party feed

Quick facts

Location Kostanay Region, Kazakhstan
Ownership 100%
Mining open-pit
Processing leaching for gold ore (3.0 Mtpa) / flotation for copper ore (1.0 Mtpa)
Reserves (JORC) 3.0 Moz GE, 1.6 g/t average grade
Resources (JORC) 2.9 Moz GE, 1.8 g/t average grade
Production start date 2007 (operated by Polymetal from 2010)
Life of mine 2032
Employees 1,129
Key 2016 numbers

Overview

Varvara — Polymetal’s first operation in Kazakhstan — was acquired by the Company in 2009 as a standalone gold and copper mine with a modern 4.2 Mtpa processing plant, excellent transport infrastructure and inexpensive energy, making it a perfect fit for becoming a regional processing hub. Today, Varvara comprises of an open-pit gold mine and the Komarovskoye gold deposit that was acquired in 2016 for US$100 million as a source of high grade, open-pittable ore feed with simple metallurgical properties, expected to replace the lower grade feed at the leaching circuit. The asset is anticipated to increase Varvara’s annual gold output by approximately 70 Koz at lower cash costs.

In Q3 2017, an updated reserve estimate for the Komar gold deposit was prepared by Polymetal, adding 535 Koz of gold with stable grades of 1.8 g/t to reserves, with the additional ore set to displace the lower-grade material from the Varvara deposit and increase its mine life to 2032. The company now plans to mine, transport by rail and process approximately 2 Mt of Komar ore per year at the Varvara processing plant. This compares with the 1 Mt per annum ore production rate envisaged at the time of the acquisition.

Location History Geology and Mineralisation Operations Reserves and Resources Exploration

Varvara is situated close to a well developed industrial area in north-western Kazakhstan, 130 km south-west of the regional centre of Kostanai and 4 km from the Russian border, with major industrial cities of Chelyabinsk and Magnitogorsk nearby. Varvara is accessible by a network of paved roads from Kostanai, and the railway via the Bataly Junction on the main international rail route (15 km away).

Additional 13 km railway spur constructed by Polymetal to facilitate bulk transportation of ore to the Varvara processing plant. The Komar gold deposit is located near the city of Zhitikara and approximately 187 km by rail from Varvara, with the nearest railway spur less than 2 km from the pit.

Location

Varvara was first discovered in 1981 in the historic hard-rock gold-mining Urals Fold Belt. European Minerals Corporation (later Orsu Metals) acquired the rights to the deposit and subsequently built an open-pit mine, a 4.2 Mtpa processing plant and other supporting infrastructure.

Open-pit mining commenced in 2006 and the gold circuit of the processing plant became operational in December 2007, with the copper-gold circuit commencing in March 2008. Since reaching commercial production, Varvara has been unable to attain its planned levels of production for a variety of reasons.

After Polymetal acquired the asset, a massive turnaround plan was launched, including the appointment of a new management team and together with Polymetal Engineering, a new mine plan and updated ore reserves estimate. The post-acquisition turnaround plan was successfully completed in 2010. Polymetal made tremendous progress in terms of optimizing the systems and technologies of the extraction process and ore treatment process, resulting in a substantial increase in productivity. Polymetal also implemented a comprehensive system of grade control, which has significantly improved the output quality.

In 2016, in line with its processing hub strategy, Polymetal acquired the Komarovskoye deposit. The asset provides high-grade, open-pittable ounces at lower cash costs that are set to substantially increase production at the Varvara hub.

The mineralized bodies at Varvarinskoye are classic gold-copper skarn types that are primarily contained within the eastern side of the local fault and are associated with the border between geological formations. Copper-gold porphyry is overlaid with quartz-sulphide gold veins and scarn to produce very complex and geometrically complicated zones of economic mineralisation. Mineralisation is discontinuous over a strike length of 4 km and is divided into five zones.

The main primary copper mineral is chalcopyrite with some bornite. The gold is mostly in free form and associated with pyrites and other sulphides. A hallow oxidation zone occurs within 10 to 50 m below the surface. In this part of the Varvara deposit, copper is mostly represented by oxide minerals not amenable to conventional flotation.

Based on mineralogy and metallurgical characteristics, all mineralisation is divided into four types based on the degree of oxidation and copper grade:

  1. primary gold (copper less than 0.2 per cent.);
  2. primary copper (with gold present);
  3. oxide gold (copper less than 0.1 per cent.);
  4. oxide copper (with gold present).

Types 1 and 3 are processed through the leaching circuit and are known as leach ore. Type 2 is processed through the flotation circuit and is known as float ore. Type 4 is currently stockpiled separately and not processed.

Komarovskoye is a low-sulphide quartz gold deposit located along the contact of the granite intrusion. Mineralisation occurs within the fault zone and consists of steeply dipping quartz-carbonate-micaceous metasomatites hosted by schists. The overall strike length of Komarovskoye is approximately 6,800m with individual mineralised zones generally 500-600m in length, 4-6m in width. Oxidation depth is limited to 30-50m below surface.

Flowcharts

Mining

At both Varvara and Komar, ore is mined via conventional open-pit truck-shovel and drill-and-blast methods. The current life-of-mine plan provides for open-pit mining until 2032, with further extensions anticipated as a result of pit enlargement and additional exploration activities, particularly at Komar.

Processing

Varvara’s processing facilities are located at a single site. Varvara has two distinct ore types based on their copper content. Run-of-mine ore is crushed in batches in a single jaw crusher, with separate crushed ore storage for leach and float material. Gold doré and gold-copper concentrate are produced from the two circuits of the single processing plant.

The float ore circuit comprises two-stage milling (SAG mill and ball mill) and conventional flotation. Concentrate is thickened, filtered, packed in big bags and trucked to a railway spur for transport to the off-taker.

The leach ore circuit comprises two-stage milling, conventional CIP leaching, carbon desorption, carbon regeneration, electrolysis and smelting. The ultimate product is gold dore.

Ore containing more than 0.2% copper (float material) goes to a 1,050 ktpa flotation circuit with the final product being a gold-copper concentrate which is sold to an off-taker.

Ore containing less than 0.2% copper (leach material) is treated by carbon-in-leach (CIL) with the final product of this process being gold doré which is sold to an off-taker. The CIL has a capacity of 3,150 ktpa.

Polymetal also routinely purchases a substantial amount of gold quartz-sulphide ore from unrelated third parties to process through the leach circuit. Ore is bought on a free-on-truck basis at the seller’s mine gate.

Ore Reserves Tonnage, Mt Gold grade, g/t Silver grade, g/t Copper grade, % GE grade, g/t Gold, Koz Silver, Moz Copper, Kt GE, Koz
Varvara 25.9 1.0 - 0.48 1.2 792 - 35.8 964
Komarovskoye 15.0 1.8 - - 1.8 873 - - 873
Maminskoye 14.7 1.9 - - 1.9 913 - - 913
Tarutin 0.7 0.1 13 1.62 3.3 2 0.3 10.8 70
Dolinnoye 1.3 2.4 - - 2.4 101 - - 101
Total 57.5 - - - 1.6 2,681 0.3 46.6 2,921
Mineral Resources Tonnage, Mt Gold grade, g/t Silver grade, g/t Copper grade, % GE grade, g/t Gold, Koz Silver, Moz Copper, Kt GE, Koz
Varvara 38.2 1.1 - 0.53 1.4 1,327 - 86.2 1,742
Komarovskoye 7.2 2.2 - - 2.2 517 - - 517
Maminskoye 2.1 1.4 - - 1.4 99 - - 99
Tarutin 0.8 0.1 8 1.45 2.9 3 0.2 11.6 76
Dolinnoye 6.1 2.5 - - 2.5 494 - - 494
Total 51.4 - - - 1.8 2,440 0.2 97.8 2,927

Exploration activities at Tarutin (150 km from Varvara plant) have been finalised. The feasibility study for the property has been completed and the deposit has now a clear path to production as another component of the hub strategy at Varvara.

Additional exploration drilling totalling 7 km was conducted at the North-Eastern and Northern areas of the Dolinnoye deposit within the optimised pit outline that was established based on exploration results from 2015. An initial reserve and resource estimate was prepared by CSA Global based on Polymetal’s share in the deposit, amounting to 101 Koz of GE at 2.4 g/t GE in reserves and 247 Koz of GE at of 2.5 g/t GE in resources.

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